What is the indirect manufacturing costs per remote control

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Reference no: EM133183631

Question - TIGER Corporation manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers:

Activities

Cost Driver

Allocation Rate

Material handling

Number of parts

P2.00 per part

Assembly

Labor hours

P20.00 per hour

Inspection

Time at inspection station

P3.00 per minute

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of P200 per labor hour.

Required -

1. What is the indirect manufacturing costs per remote control assuming the traditional method is used and a batch of 500 remote controls are produced? The batch requires 1,000 parts, 10 direct manufacturing labor hours, and 15 minutes of inspection time.

A. P3.25

B. P2.00

C. P0.25

D. P4.00

2. What is the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labor hours, and 2.5 minutes of inspection time.

A. P6.55

B. P5.55

C. P4.55

D. P4.00

Reference no: EM133183631

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